ISDA® International Swaps and Derivatives Association, Inc. NOVATION AGREEMENT dated as of June 1, 2007 among:
Exhibit
10.2
International
Swaps and Derivatives Association, Inc.
dated
as
of June 1, 2007 among:
THE
ROYAL
BANK OF SCOTLAND PLC.
(the
"Remaining
Party"),
NOVASTAR
MORTGAGE, INC. (the "Transferor")
AND
NOVASTAR
MORTGAGE SUPPLEMENTAL INTEREST TRUST, SERIES 2007-2 (the "Transferee").
The
Remaining Party and the Transferor are parties to a 1992 ISDA Master dated
as of
July 19, 2006 (the “Old
Agreement”).
The
Remaining Party and the Transferor originally entered into certain transactions
(each an "Old
Transaction")
under
the Old Agreement, each evidenced by a Confirmation (an "Old
Confirmation")
with
reference number IRG16181489, IRG16181493, IRG16188578, IRG16189509
respectively, attached hereto as Exhibit I.
The
Remaining Party and the Transferee are simultaneously entering into a 1992
ISDA
Master Agreement dated as of the date hereof in the form attached hereto as
Exhibit II (the “New
Agreement”).
With
effect from and including June 1, 2007 (the "Novation Date")
the
Transferor wishes to transfer by novation to the Transferee, and the Transferee
wishes to accept the transfer by novation of, all the rights, liabilities,
duties and obligations of the Transferor under and in respect of each Old
Transaction, with the exception of the Excluded Rights and Obligations referred
to below, with the effect that the Remaining Party and the Transferee enter
into
a new transaction (each a "New
Transaction")
between them having terms identical to those of each Old Transaction, subject
to
the same exceptions and as more particularly described below. For the avoidance
of doubt, the first transaction period being novated in each Old Transaction
is
the full period ending on the Fixed Rate Payer Payment Date in March
2007.
The
Remaining Party wishes to accept the Transferee as its sole counterparty with
respect to the New Transactions.
The
Transferor and the Remaining Party wish to have released and discharged, as
a
result and to the extent of the transfer described above, their respective
obligations under and in respect of the Old Transactions.
Accordingly,
the parties agree as follows: —
1. Definitions.
Terms
defined in the ISDA Master Agreement (Multicurrency-Cross Border) as published
in 1992 by the International Swaps and Derivatives Association, Inc. (the
"1992
ISDA Master Agreement")
are
used herein as so defined, unless otherwise provided herein. For purposes of
this Novation Agreement, "Excluded
Rights and Obligations"
means
all obligations of each of the Transferor and the Remaining Party to Transfer
(as defined in the Credit Support Annex to the Old Agreement) Eligible
Collateral (as so defined) in respect of the Old Transactions and all related
rights of the Remaining Party and the Transferor under the Old Agreement.
2. Transfer,
Release, Discharge and Undertakings.
Subject
to the execution and delivery of the New Agreement by each of the parties
thereto to the other, with effect from and including the Novation Date and
in
consideration of the mutual representations, warranties and covenants contained
in this Novation Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by each of the
parties):
| (a) |
subject
to Section 2(d) of this Novation Agreement, the Remaining Party and
the
Transferor are each released and discharged from further obligations
to
each other with respect to each Old Transaction and their respective
rights against each other thereunder are cancelled, provided that
such
release and discharge shall not affect any rights, liabilities or
obligations of the Remaining Party or the Transferor with respect
to
payments or other obligations due and payable or due to be performed
prior
to the Novation Date, and all such payments and obligations shall
be paid
or performed by the Remaining Party or the Transferor in accordance
with
the terms of the Old Transactions;
|
| (b) |
in
respect of each New Transaction, the Remaining Party and the Transferee
each undertake liabilities and obligations towards the other and
acquire
rights against each other identical in their terms to each corresponding
Old Transaction (and, for the avoidance of doubt, as if the Transferee
were the Transferor and with the Remaining Party remaining the Remaining
Party, save for the Excluded Rights and Obligations and any other
rights,
liabilities or obligations of the Remaining Party or the Transferor
with
respect to payments or other obligations due and payable or due to
be
performed prior to the Novation Date). For the sake of clarity, all
references to Independent Amounts shall be deemed deleted from the
Confirmations for each New
Transaction;
|
| (c) |
each
New Transaction shall be governed by, form part of, and be subject
to the
New Agreement and the relevant Old Confirmation (which, in conjunction
and
as deemed modified to be consistent with this Novation Agreement,
shall be
deemed to be a Confirmation between the Remaining Party and the
Transferee), and the offices of the Remaining Party and the Transferee
for
purposes of each New Transaction shall be their offices at their
addresses
for notices provided for in the New Agreement;
and
|
| (d) |
on
the Novation Date, the Remaining Party shall transfer all of the
Posted
Collateral (as defined in the Credit Support Annex to the Old Agreement)
held by it in respect of the Old Transactions to the account or accounts
of the Transferor identified by it by notice given to the Remaining
Party
as provided in the Old Agreement, and the Transferor shall transfer
all
Posted Collateral held by it in respect of the Old Transactions to
the
account or accounts of the Remaining Party identified by it by notice
given to the Transferor as provided in the Old Agreement, in each
case
together with all Interest Amount and Distributions thereon (as so
defined). The Remaining Party’s or the Transferor’s failure to effect
these transfers will continue to constitute Potential Events of Default
and may constitute Events of Default under the Old Agreement
notwithstanding the transfer by novation contemplated
herein.
|
3. Representations
and Warranties.
| (a) |
On
the date of this Novation
Agreement:
|
| (i) |
Each
of the parties makes to each of the other parties those representations
and warranties set forth in Section 3(a) of the 1992 ISDA Master
Agreement
with references in such Section to "this Agreement" or "any Credit
Support
Document" being deemed references to this Novation Agreement
alone.
|
2
| (ii) |
The
Remaining Party and the Transferor each makes to the other, and the
Remaining Party and the Transferee each makes to the other, the
representation set forth in Section 3(b) of the 1992 ISDA Master
Agreement, in each case with respect to the Old Agreement or the
New
Agreement, as the case may be, and taking into account the parties
entering into and performing their obligations under this Novation
Agreement.
|
| (iii) |
Each
of the Transferor and the Remaining Party represents and warrants
to each
other and to the Transferee that:
|
| (A) |
it
has made no prior transfer (whether by way of security or otherwise)
of
the Old Agreement or any interest or obligation in or under the Old
Agreement or in respect of any Old Transaction;
and
|
| (B) |
without
prejudice to the obligations of the Remaining Party and the Transferor
referred to in Section 2(d) of this Novation Agreement, as of the
Novation
Date, all obligations of the Transferor and the Remaining Party under
each
Old Transaction required to be performed before the Novation Date
have
been fulfilled.
|
| (iv) |
Each
party represents to each of the other parties:
--
|
| (A) |
Non-Reliance.
Transferor and the Remaining Party is each acting for its own account,
and
with respect to the Transferee, Deutsche Bank National Trust Company
is
executing as Trustee for the Transferee. Each has made its own independent
decisions to enter into this Novation Agreement and as to whether
this
Novation Agreement is appropriate or proper for it based upon its
own
judgment and upon advice from such advisers as it has deemed necessary.
It
is not relying on any communication (written or oral) of the other
parties
as investment advice or as a recommendation to enter into this Novation
Agreement; it being understood that information and explanations
related
to the terms and conditions of this Novation Agreement shall not be
considered investment advice or a recommendation to enter into this
Novation Agreement. No communication (written or oral) received from
any
of the other parties shall be deemed to be an assurance or guarantee
as to
the expected results of this Novation
Agreement;
|
| (B) |
Assessment
and Understanding. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks
of
this Novation Agreement. It is also capable of assuming, and assumes,
the
risks of this Novation Agreement;
and
|
| (C) |
Status
of Parties. None of the other parties is acting as a fiduciary for
or an
adviser to it in respect of this Novation
Agreement.
|
| (b) |
The
Transferor makes no representation or warranty and does not assume
any
responsibility with respect to the legality, validity, effectiveness,
adequacy or enforceability of any New Transaction or the New Agreement
or
any documents relating thereto and assumes no responsibility for
the
condition, financial or otherwise, of the Remaining Party, the Transferee
or any other person or for the performance and observance by the
Remaining
Party, the Transferee or any other person of any of its obligations
under
any New Transaction or the New Agreement or any document relating
thereto
and any and all such conditions and warranties, whether express or
implied
by law or otherwise, are hereby
excluded.
|
3
4. Counterparts.
This
Novation Agreement (and each amendment, modification and waiver in respect
of
it) may be executed and delivered in counterparts (including by facsimile
transmission), each of which
will be deemed an original.
5. Costs
and Expenses.
The
parties will each pay their own costs and expenses (including legal fees)
incurred in connection with this Novation Agreement and as a result of the
negotiation, preparation and execution of this Novation Agreement.
6.
Amendments.
No
amendment, modification or waiver in respect of this Novation Agreement will
be
effective unless in writing (including a writing evidenced by a facsimile
transmission) and executed by each of the parties or confirmed by an exchange
of
telexes or electronic messages on an electronic messaging system and subject
to
the Rating Agency Condition (as defined in the New Agreement).
|
7.
|
(a)
|
Governing
Law.
|
This
Novation Agreement will be governed by and construed in accordance with the
laws
of the State of New York without reference to the conflict of laws provisions
thereof.
|
(b)
|
Jurisdiction.
|
The
terms
of Section 13(b) of the 1992 ISDA Master Agreement shall apply to this Novation
Agreement with references in such Section to "this Agreement" being deemed
references to this Novation Agreement alone.
| (c) | Not Acting in Individual Capacity. |
|
Deutsche
Bank National Trust Company is signing this Novation Agreement solely
in
its capacity as Trustee of the Transferee under the Pooling and Servicing
Agreement among NovaStar Mortgage Funding Corporation, NovaStar Mortgage,
Inc., U.S. Bank National Association, and Deutsche Bank National
Trust
Company dated as of June 1, 2007 (the "Pooling
and Servicing Agreement")
and in the exercise of the powers and authority conferred and vested
in it
thereunder and not in its individual capacity. It is expressly understood
and agreed by the parties hereto that (i) each of the representations,
undertakings and agreements herein stated to be those of Transferee
is
made and intended for the purpose of binding only the Transferee,
(ii)
nothing herein contained shall be construed as creating any liability
for
Deutsche Bank National Trust Company, individually or personally,
to
perform any covenant (either express or implied) contained herein
stated
to be those of Transferee, and all such liability, if any, is hereby
expressly waived by the parties hereto, and such waiver shall bind
any
third party making a claim by or through one of the parties hereto,
and
(iii) under no circumstances shall Deutsche Bank National Trust Company
be
liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Transferee under this
Novation Agreement. All persons having any claim against the Trustee
reason of the Transactions contemplated by this Novation Agreement
shall
look only to the assets of NovaStar Mortgage Supplemental Interest
Trust,
Series 2007-2 (subject to the availability of funds therefor in accordance
with the Flow of Funds as set forth in Article IV of the Pooling
and
Servicing Agreement) for payment or satisfaction
thereof.
|
4
The
foregoing may not be construed to give to Majority Certificateholders any rights
under this Novation Agreement.
|
(d)
|
Pooling
and Servicing Agreement.
|
Capitalized
terms used in this Novation Agreement that are not defined herein and are
defined in the Pooling and Servicing Agreement shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
|
(e)
|
Agency
Role of Greenwich Capital Markets, Inc.
In
connection with this Novation Agreement, Greenwich Capital Markets,
Inc.
has acted as agent on behalf of the Remaining Party. Greenwich Capital
Markets, Inc. has not guaranteed and is not otherwise responsible
for the
obligations of the Remaining Party under this
Agreement.
|
|
(f)
|
Calculation
|
|
Promptly
after each Reset Date, but
in no event later than three New York Business Days prior to each
related
Distribution Date, the
Calculation Agent shall deliver the reset notice in writing via mail
or
facsimile to the Trustee at the address provided in the notices portion
of
the New Agreement.
|
|
(g)
|
Account
Details
|
|
Remaining
Party:
|
The
Royal Bank of Scotland
|
|
Bank: JPMorgan Chase Bank
ABA No.: 000000000
Account No.: 400930153
Attention: Financial Markets Fixed Income and
Interest Rate Derivative Operations, London
SWIFT Code: SWIFT XXXXXX0XXXX with JPMorgan Chase
Bank, New York XXXXXX00
|
| Transferee: |
Deutsche Bank National Trust Company
ABA # 000000000
Acct # 01419663
Acct Name NYLTD Funds Control - Stars West
Ref: Trust Administration -
NS0702
|
5
IN
WITNESS WHEREOF the parties have executed this Novation Agreement on the
respective dates specified below with effect from and including the Novation
Date.
| THE ROYAL BANK OF SCOTLAND PLC | NOVASTAR MORTGAGE, INC. | ||
| By: Greenwich Capital Markets, Inc., its agent | |||
| By: /s/ Xxxxxxx Xxxxxxx | By: /s/ Xxxxx X. Xxxxxx | ||
|
Name: Xxxxxxx Xxxxxxx |
Name: Xxxxx X. Xxxxxx |
||
|
Title:
Vice
President
|
Title:
Vice
President
|
NOVASTAR
MORTGAGE SUPPLEMENTAL INTEREST TRUST, SERIES 2007-2
By:
Deutsche Bank National Trust Company, as
Trustee
under the Pooling and Servicing
Agreement,
acting not in its individual capacity,
but
solely in its capacity as Trustee to NovaStar
Mortgage
Supplemental Interest Trust, Series 2007-2
| By: /s/ Xxxxxxx Xxxxx | |||
|
Name: Xxxxxxx Xxxxx |
|||
|
Title:
Vice
President
|
6
Exhibit
I
[Old
Hedge Confirmations attached behind this page]
